United States, Vietnam Close In on Trade Pact

US And Vietnamese trade negotiators will work through the weekend to complete a long-stalled pact that could transform commercial ties between the former enemies and put Hanoi on course to joining the World Trade Organisation.

After four years of on-and-off negotiations, a historic agreement was finally within reach that would reduce tariffs on goods and services, protect intellectual property and improve US-Vietnamese investment relations. An announcement could be made in Washington early next week.

US trade officials would not discuss the final sticking points in the talks, which began on Thursday between US Trade Representative Charlene Barshefsky and Vietnam's Trade Minister Vu Khoan after expert-level negotiations earlier this week.

Barshefsky's spokeswoman described the meetings thus far as "very constructive" without elaborating. "The talks are expected to continue into the weekend," the spokeswoman added, though not necessarily at the Barshefsky-Khoan level.

Business leaders were increasingly optimistic an agreement would be reached between the two countries, combatants in the Vietnam War that ended in 1975.

"I am hopeful that it can be completed next week," said US-Vietnam Trade Council President Virginia Foote, who is close to the deliberations. While progress has been made, Foote said some differences remained.

If agreed, the pact would be one of the most important economic milestones for Vietnam since the country embarked on market-oriented reforms in the late 1980s.

It would mark a major step toward completing the normalisation process that began on July 11, 1995, when President Bill Clinton extended diplomatic ties to Vietnam, and it also would boost Hanoi's bid to join the Geneva-based WTO.

In terms of commerce, the proposed trade agreement would mean far more for Vietnam than for the United States because Hanoi would win Washington's coveted normal trade relations (NTR) status.

According to a recent World Bank report the agreement could more than double Vietnam's exports to the United States to $768 million from $338 million in 1996.

It could also boost foreign investment in Vietnam, which has fallen to around $500 million a year from peaks of $2.8 billion in 1996 and 1997 when Hanoi was viewed as Asia's next dynamic tiger economy.

For the United States the impact was harder to gauge. US companies like shoemaker Nike Inc. and agribusiness giant Cargill Inc. stand to benefit from increased access to the Vietnamese marketplace, but analysts said the gains may be slow to materialise.

This is not the first time Washington and Hanoi have been on the verge of a market-opening agreement, which explains why Barshefsky's office has sought to play down expectations ahead of the talks.

Washington announced an "agreement in principle" in July 1999, only to have Hanoi back away, arguing that certain provisions were unfair.

Analysts believe Vietnam balked in part because it feared the loss of economic control that would come with market opening. The delay darkened the mood among investors, fed up with Vietnam's closed economy and high costs.

But US officials and business leaders say Vietnam appears ready to move forward, emboldened in part by US House of Representatives approval of a trade agreement with China. Beijing is expected to join the WTO later this year, and Vietnam has similar aspirations.

Clinton was also eager to complete the normalisation process before the end of his final year in office. Popular with business, a market-opening agreement with Vietnam would help cement Clinton's free-trade record following the 1999 deal with China.

If the agreement is completed, Vietnam would lower its tariffs and undertake a broad range of measures to open its markets to US goods, services and investment.

In return Hanoi would get access to the US market under the same system of low tariffs accorded most nations, assuming Congress approved normal trade-relations status.

Vietnamese exporters could benefit almost immediately, with tariff rates averaging 40 percent being cut to less than 3 percent, but Hanoi's NTR status would be subject to annual congressional reviews.

Though Republican congressional leaders support closer trade ties with Vietnam, it remained to be seen whether lawmakers would have enough time to approve the pact this year. The legislative session will be cut short by US presidential and congressional elections in November.







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